China tilts to growth stabilization, deepening reforms

BEIJING - Chinese policymakers appear to be putting more focus on growth stabilization while continuing to push reforms as headwinds to the economy remain.

Although the latest data shows the economy remains generally stable and on track to reach its annual growth target, some indicators have shown signs of slower growth.

Industrial enterprise profit growth slowed to 16.2 percent in July from 20 percent in June. For the first seven months, enterprises' profits climbed 17.1 percent from one year earlier, down a notch from the 17.2-percent rise for January-June.

The reading added to signs of moderation, as revealed by indicators, including retail sales, fixed-asset investment and purchasing managers' index, which all maintained strong growth albeit at a slower pace.

Noting fluctuations of the data were within a reasonable range, Ning Jizhe, deputy head of the National Development and Reform Commission and head of the National Bureau of Statistics, said more focus should be on avoiding these fluctuations transforming into a downward trend.

The government vowed to coordinate efforts and policies to stabilize employment, finance, foreign trade, foreign investment, investment and expectations at a meeting of the Political Bureau of the Communist Party of China (CPC) Central Committee last month.

The country should view strengthening areas of weakness as an important task in deepening supply-side structural reform, with intensified efforts in improving infrastructure, according to the statement issued after the meeting.

Growth deceleration of infrastructure investment, a major source of downside pressure on short-term economic growth, will be reversed as the government's supportive policies come through, said Zhang Liqun, a researcher with the Development Research Center (DRC) of the State Council, a government think tank.

On the monetary front, the central bank changed the wording for liquidity management in its second-quarter monetary policy report to "keep liquidity at a reasonable and ample level" from "ensure a reasonable, stable level of liquidity" in the first-quarter report.

Analysts believe the government's recent adjusting toward a pro-growth stance was just policy fine-tuning and presaged no change in strategy.

UBS economist Wang Tao expects more policy easing to be on the way, but the magnitude of easing is data dependent and designed mainly to offset any upcoming negative external shocks.

Wang Jun, a chief economist at Zhongyuan Bank, said the country would enhance demand-side regulation in the short term and continue to push supply-side structural reform in the longer term. China's rapid growth over the past decades was fueled by capital investment, exports and consumption, which are considered as being on the demand side.

To promote high-quality development, the country should step up efforts in sectors including protecting property rights and intellectual property, improving the mechanism for risk management and promoting opening-up, said Wang Yiming, deputy director of the DRC.